Bonds Battle Back After Slightly Weaker Start

There are bigger-picture, thematic trends in the bond market and then there are incidental, day-to-day movements that simply pass the time.  Monday was a prime example of the latter (i.e. not important in the bigger picture), but at least it ended with bonds at their best levels of the day.  Yields rose overnight as they followed EU weakness.  Most of the domestic session was spent pushing back in the other direction, but all of the above occurred in a narrow range.  Bonds are biding their time between now and the bigger volatility expected in the wake of Wednesday's Fed meeting (and the inevitable tapering announcement). 

Econ Data / Events

  • Fed MBS Buying 10am & 1130am

  • ISM Manufacturing 60.8 vs 60.5, 61.1 prev.

Market Movement Recap
08:32 AM

initially flat overnight, then modestly weaker in Europe.  10yr up 2.5 bps on the day at 1.586.  MBS down an eighth.  No major data until 10am's ISM Manufacturing.

10:03 AM

Slightly weaker heading into ISM data, but recovering slightly afterward.  10s were as high as 1.605, but now down to 1.591 (still up 3bps on the day).  2.5 UMBS are once again down an eight after being down 5 ticks (.16) before the data.

01:49 PM

Flat to slightly stronger since the EU-led recovery after 10am.  10yr yields up 1.6bps at 1.577 and 2.5 UMBS down only 2 ticks (0.06) at 102-23 (102.78).